The company, which launched in April 2005, originally set out to aggregate classified ads from various media outlets to list on its own site, but Craig Donato, founder and CEO of Oodle, said Facebook has now become bigger and is generating 80 percent of its traffic.

Just like with newspaper classifieds or listings on Craigslist, users can post items they want to sell or buy on Oodle or the Facebook Marketplace. Many Facebook users may recognize it from the weekly email the service sends out detailing what items are for sale in their extended friend groups.

Donato said Facebook has become the ideal intermediary to make connections for selling vs. Craiglist, which has gained a reputation for sketchy, or just flaky, behavior among its anonymous users.

“It’s people not showing up, or they show up and say they’ll give you half price. But once we start to introduce an identity, and show how you are connected through mutual friends, or the same college, it introduces social norms. It’s people acting like real people.”

In this scenario, Donato thinks it could even encourage people to recycle items–as opposed to making a profit off them.

Oodle commissioned a survey, which was conducted by Harris Interactive, that found 69 that percent of U.S. adults said they’d rather give away or share unneeded items with friends or acquaintances rather then sell them. In the new format, users can share a “want ad” that’s visible to friends.

To that end, Oodle is mostly scrapping its original business in favor of increasing its relationship with the social network.

It will no longer seek new deals with media outlets, and will push users on Oodle.com to sign up using Facebook Connect. It’s also redesigning the way the listings look, and changing the way emails are designed.

Is it too much reliance on Facebook?

Donato doesn’t think so: “It is the social fabric of the Internet. Facebook has established a social layer and we want to fully embrace it.”

BoomTown was there Thursday when Facebook announced a new look for profiles and homepages that incorporates a “timeline” or “stream” of realtime updates. According to CEO Mark Zuckerberg, “This creates a continuous stream of information that delivers a deeper understanding for everyone participating in it.” It’s also reminiscent of some other sites, not that it’ll matter much in the long run. Speaking of Twitter, BoomTown got impatient waiting around for its revenue strategy to materialize and went ahead and started a “Twitter Business Plan Count-Up.” The Chia-Twit has potential, but the winning financial strategy so far, by a mile, is the “Snuggie-Tweet.” BoomTown describes it best.

MediaMemo was all (well, almost all) about old media vs. new media. This week. Hulu, which lets you watch Fox and NBC shows on your computer, has been playing tug-of-war with Boxee, which lets you watch Web video on your TV. Hulu and its TV programmer owners don’t really want you to have that option–the resulting standoff could be long and interesting. MediaMemo also reported on MegaVideo, the Chinese site that makes it easy to watch pirated TV shows and movies online, noting that Hollywood’s Napster moment has probably just arrived. Universal Music Group–which has already had its share of Napster moments–is discussing a music site with YouTube. According to MediaMemo, it would be the most likely way to benefit both YouTube and UMG–not to mention music fans.

Digital Daily must be getting tired of that same old economic refrain. Among the highlights of this week’s crappy news: the jobless rate in Silicon Valley is at 9.3 percent and getting higher. At least Google (GOOG) may be getting some big love soon–Vivek Kundra, President Obama’s chief information officer, famously switched 38,000 workers from Microsoft Office to Google’s Web-based office suite as chief technology officer for the District of Columbia. No word yet on office software for the new White House, but here’s hoping for a more secure Google Docs. DD also noted the lack of a release date for Palm’s (PALM) new Pre from Sprint (S). Apparently it’ll be a while longer before anyone finds out if the Pre really is an iPhone-killer.

On the Personal Technology front, Walt Mossberg gave Apple’s (AAPL) new Safari browser a mixed review, and offered his first impressions of Kindle software on the iPhone. In Mossberg’s Mailbox, Walt answered questions about reading periodicals on Amazon’s (AMZN) Kindle 2, keeping a monitor from going to sleep in the middle of a movie, and the benefits of a netbook for traveling. And in the Mossberg Solution, Katie Boehret took an early look at a new Oodle-powered Facebook Marketplace, and reported on its pros and cons.

Spring forward. More next week.

But even though you can use these services without leaving home, many of them still require you to go to a specific Web site — one you wouldn’t necessarily visit regularly. Sites like Gazelle.com and Venjuvo.com that pay cash for old electronics (or just recycle them) aren’t exactly online destinations.

Now one of those ways to unload your stuff involves a Web site you might visit many times a day. A site that has considerable sway in the social-networking world, where over 175 million active users go to share personal stories, photos and videos with hundreds of “friends.”

That’s right, I’m talking about Facebook. Tuesday, the social-networking giant announced its new Facebook Marketplace, Facebook.com/Marketplace, an integrated application powered by Oodle, known for its work with online classified ads. Marketplace uses colorful icons to represent four actions you can take in its app: Sell It; Sell for a Cause; Give it Away; and Ask for It.

Facebook Marketplace users can pick from 12 categories of listings, as well as buy or sell items for a favorite cause.

Oodle granted me early access to the Marketplace app before it became available Tuesday. A friend of mine and I were both set up with test accounts so that we could see one another’s fake Marketplace items and interact with one another within Marketplace; hundreds of Oodle employees also were testing this. (It was fun to see what people offer for sale when they’re just pretending, like one person who offered to sell everything on a colleague’s desk when he was out.)

Facebook’s original iteration of Marketplace started back in 2007, but was geared toward services like housing and jobs. The Oodle-powered Marketplace is merchandise-centric and includes more detailed organization, deeper integration with Facebook, and ways to buy or sell things to raise money for 1.7 million causes.

It still lacks a built-in electronic payment system, such as PayPal or Discover card, for exchanges between users or donations to causes. Instead, Marketplace encourages its users to exchange money however they choose, like traditional classified ads. And that could cause some obvious problems. For instance, if an item were sold for a cause, the seller could later donate the amount via credit card after closing a listing. But there’s no guarantee that the seller will actually do this. Oodle says it will listen to feedback from the Facebook audience and will try to integrate e-payments, if preferred.

Every posted item can include a location, description, category, photo and an explanation of why it’s in the Marketplace. Each item is reviewed by Oodle’s fraud-detection program, which looks for inappropriate content and suspicious activity, and a post could take up to 30 minutes to appear online after you submit it. My posts displayed almost instantly in the Marketplace newsfeed. Users also can opt to publish their posts to their Facebook profiles.

One example of Marketplace’s newly detailed organization comes in its browsing options. The old version of Marketplace had options to browse through jobs and housing, but not specific categories of items for sale. Now, users can browse through 12 categories of specific items including “Home & Garden,” “Baby & Kid Stuff,” “Tickets” and “Musical Instruments.” Items that don’t fit into these 12 categories are put into an “Everything Else” category.

Each item in Marketplace integrates with Facebook’s familiar format, like having its own online “wall” where questions and comments appear. If you’re looking for something in Marketplace by using the “Ask for It” option, you can recruit people to help you find the item by selecting from your list of friends, which works the same way people can suggest Facebook people to friends who might know them. Glancing at an item shows the seller’s profile photo, a link to all of the person’s listings and a brief history of his or her overall Marketplace activity, such as “3 listings in the last month.”

The integration of charitable causes into Marketplace gives supporters new ways to raise money for a favorite group like the World Wildlife Fund or Habitat for Humanity International. On the Marketplace home page, causes are displayed in a right-hand panel with a daily featured cause. This Featured Cause shows who else supports it and how many items you can buy or sell to support it.

Privacy is a natural concern in online marketplaces. By default, your posted listings are visible to any Facebook member in Marketplace. Users can opt to remain anonymous — they’re listed as “Facebook user is selling a bike,” for example. In that case, the only way someone can contact that person is by posting a comment and waiting for the seller to respond.

People who aren’t members of Facebook can see your listings by browsing and searching Marketplace, but they can’t post, comment or contact users. Unlike online marketplaces or services that can be used by anyone, Marketplace requires that users be members of the site to interact with sellers, which can be a downside. Plenty of people who aren’t on Facebook might not want to join the social-networking phenomenon just to offload the old couch gathering dust in the garage.

All user notifications — messages indicated in red at the bottom right of a Facebook page — will reflect friends’ activities in the Marketplace, unless you reset the notifications of the Facebook Marketplace app to not notify you. I suggest doing this, unless you really want to know about all your friends’ activities in Marketplace.

Four color-coded icons represent activities in Marketplace and are useful when reading lists of items at a glance: A green dollar sign represents Sell It and a red heart represents Sell for a Cause, for example. And details about each cause are integrated within Marketplace.

The Oodle-powered Facebook Marketplace is straightforward and well organized, and if you’re a Facebook user, its format will be familiar. If you’re not, and you’re looking for a way to sell or give items away for a charity or otherwise, Marketplace might encourage you to join the giant social network. But its payment program could be made a lot easier with electronic options.

Edited By Walter S. Mossberg

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